BSP warns the public about the growing prevalence of auto loan scams
MANILA, Philippines — The central bank has warned the public against fraudulent schemes involving the sale of motor vehicles, with various modus operandi victimizing both buyers and sellers, and banks getting ripped off for granting loans. automobile loans to fictitious borrowers.
In a statement released on Wednesday (September 29), the Bangko Sentral ng Pilipinas (BSP) warned the public against an increasingly widespread racket used by car theft syndicates.
The authors of what is known as the “assume balance” or “pasalo” program – also known as “pasalo-benta” – are targeting buyers who hope to save money on their vehicle purchases and sellers who must transfer their loan debts to the buyer.
Under this program, a syndicate member would purchase a vehicle from a seller with an agreement to assume the car loan payments. However, the syndicate member does not intend to pay the remaining depreciation and will sell or transfer the vehicle to an end buyer for profit using falsified documents. Because the end buyer has false documents, he has no rights to the vehicle.
“As a result, the original seller defaults on their car loan and the car is repossessed by the financial institution, leaving the end buyer with nothing,” the central bank explained.
The regulator noted that in these cases, banks still hold the original vehicle registration certificates from the Land Transport Bureau and car dealers, and can still retrieve them.
This can be done through the help of law enforcement agencies who can report or issue alerts for vehicles.
“However, the buyer cannot recover anything because he has falsified documents,” the agency said.
The central bank outlined details of organized crime through auto loans in a memorandum sent to financial institutions last month.
The BSP memorandum called on financial institutions to prevent these crimes by strengthening the conduct of customer identification and verification procedures as part of the customer due diligence process.
He also explained other types of illegal car-related activities, including rent-tangay (selling a rented vehicle), rent-sangla (pawning a rented vehicle), loan or labas-casaschemes (paying a person to take out a car loan and get away with the vehicle).
The central bank noted that the Philippine National Police also recently warned against syndicates acquiring high-end motor vehicles through auto loans under sham circumstances.
These crimes are committed through the use of fabricated conduction stickers, plate numbers, identities and falsified documents like ID cards and work certificates to successfully obtain car loans.
Auto theft syndicates sometimes resort to identity theft by using a real person’s name, address, and company profile, but with a different photo.
The BSP also reminded banks to strictly observe and strengthen the implementation of anti-money laundering regulations on customer identification and verification procedures; permanent monitoring of customers and their transactions; reporting of suspicious transactions; and ongoing anti-money laundering training programs including controls relating to partner or approved car dealerships.
Banks have been reminded to file suspicious transaction reports where appropriate.
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